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EXHIBIT 4.11
AMENDMENT NUMBER ONE AND WAIVER TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER ONE AND WAIVER TO LOAN AND SECURITY AGREEMENT (this
"AMENDMENT") dated as of March ___, 1999, is entered into among AUREAL
SEMICONDUCTOR INC., a Delaware corporation ("Borrower"), on the one hand, and,
on the other hand, Agent (as hereinafter defined) and the financial institutions
(collectively, the "Lenders" and individually, a "Lender") that are signatories
to that certain Loan and Security Agreement, dated as of June 5, 1998 (as
amended, restated, supplemented, or otherwise modified from time to time, the
"Loan Agreement"), entered into between Borrower, Lenders, and TRANSAMERICA
BUSINESS CREDIT CORPORATION, a Delaware corporation, as agent (herein, in such
capacity, referred to as "Agent") for Lenders thereunder, in light of the
following:
W I T N E S S E T H
WHEREAS, the Parties desire to amend the Loan Agreement, in accordance with
the amendment provisions of Section 16.1 thereof, as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend the
Loan Agreement, effective immediately, as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement, as amended
hereby.
2. AMENDMENTS TO LOAN AGREEMENT. Upon the effectiveness of this Amendment, the
parties hereby agree as follows:
(a) The Loan Agreement hereby is amended to add the following new Section
2.2(d):
(d) Anything to the contrary in the Agreement notwithstanding,
Agent shall impose, and Borrower hereby consents to the establishment
of, a reserve against the Maximum Tranche B Amount equal to 35% of the
Maximum Tranche B Amount (i.e., $2,625,000.00). Agent may not change
the amount of the reserve established under this subsection without
the prior written consent of all of the Lenders.
(b) Section 2.11(b) of the Loan Agreement hereby is amended and restated
in its entirety to read as follows:
(b) Supplemental Origination Fee. A one-time supplemental
origination fee in the amount of $200,000, such fee to be fully earned
on the Effective Date and due and payable on the first anniversary of
the Effective Date or such earlier date (if any) on which this
Agreement is terminated; provided, however, if all of the Obligations
owing to Xxxxxxx Xxxxx Credit Partners L.P., a Bermuda limited
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partnership ("Goldman"), have been paid in full, in cash, on or prior
to March 31, 1999, and all of the Commitments of Goldman are
terminated on or prior to March 31, 1999, then, in connection
therewith, Goldman hereby agrees to waive Xxxxxxx'x Pro-Rata Share of
the supplemental origination fee.
(c) Section 3.6 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at
any time upon 5 days prior written notice to Agent to terminate this
Agreement by paying to Agent, for the ratable benefit of the Lender
Group, in cash, the Obligations, in full, together with a premium (the
"Early Termination Premium") equal to $250,000; provided, however, if
the Obligations owing to Goldman have been paid in full, in cash, on
or prior to March 31, 1999, and all of the Commitments of Goldman are
terminated on or prior to March 31, 1999, then, in connection
therewith, Goldman hereby agrees to waive Xxxxxxx'x Pro-Rata Share of
the Early Termination Premium and surrender Xxxxxxx'x Warrant to
Borrower.
3. WAIVERS OF EXISTING EVENTS OF DEFAULT. Upon the effectiveness of this
Amendment, Lender hereby waives each of the Events of Default existing as of the
date of this Amendment and identified on Schedule A attached to this Amendment
(each, a "Specified Event of Default"). Such waiver is specific in time and in
intent and does not constitute, nor should it be construed as constituting,
except to the extent expressly set forth herein, a waiver or modification of any
term of, or right, power, or privilege under, the Loan Agreement, the other Loan
Documents, or any agreement, contract, indenture, document, or instrument
mentioned therein. Such waiver does not preclude any exercise of any right,
power, or privilege under any Loan Document, based upon any Event of Default
other than the Specified Events of Default.
4. CONDITION PRECEDENTS TO AMENDMENT. The satisfaction of each of the
following unless waived or deferred by Agent in its sole discretion, shall
constitute conditions precedent to the effectiveness of this Amendment and each
and every provision hereof:
(a) The representations and warranties in the Loan Agreement as amended by
this Amendment, and the other Loan Documents shall be true and correct in all
respects on and as of the date hereof, as though made on such date (except to
the extent that such representations and warranties relate solely to an earlier
date).
(b) No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
governmental authority against the Agent or Lenders.
(c) Agent shall have received fully executed counterpart signatures to
this Amendment.
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(d) Agent shall have received fully executed counterpart signatures to
that certain Amendment Number Two to Put Agreement, dated as of the date hereof,
by and among each of the funds managed by, or other affiliates of, Oaktree
Capital Management LLC identified on Schedule 1A thereto or TCW Special Credits
identified on Schedule 1 thereto and Xxxxxxx Xxxxx Credit Partners, L.P., a
Bermuda limited partnership.
(e) Agent shall have received fully executed counterpart signatures to
that certain Amendment Number Two to Put Agreement, dated as of the date hereof,
by and among each of the funds managed by, or other affiliates of, Oaktree
Capital Management LLC identified on Schedule 1A thereto or TCW Special Credits
identified on Schedule 1 thereto and Transamerica Business Credit Corporation, a
Delaware corporation.
5. CONSTRUCTION. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to its
conflicts-of-laws principles (other than any provisions thereof validating the
choice of the laws of the State of New York as the governing law).
6. ENTIRE AMENDMENT. This Amendment, and terms and provisions hereof,
constitute the entire agreement among the parties pertaining to the subject
matter hereof and supersedes any and all prior or contemporaneous amendments
relating to the subject matter hereof. Except as expressly amended hereby, the
Loan Agreement and other Loan Documents shall remain unchanged and in full force
and effect. To the extent any terms or provisions of this Amendment conflict
with those of the Loan Agreement or other Loan Document, the terms and
provisions of this Amendment shall control. This Amendment shall be deemed part
of and is hereby incorporated into the Loan Agreement.
7. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Amendment may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Amendment by
signing any such counterpart. Delivery of an executed counterpart of this
Amendment by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Amendment. Any party delivering an
executed counterpart of this Amendment by telefacsimile also shall deliver an
original executed counterpart of this Amendment, but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Amendment.
8. AMENDMENTS. This Amendment cannot be altered, amended, changed or modified
in any respect or particular unless each such alteration, amendment, change or
modification shall have been agreed to by each of the parties and reduced to
writing in its entirety and signed and delivered by each party.
9. MISCELLANEOUS. (a) Upon the effectiveness of this Amendment, each reference
in the Loan Agreement to "this Agreement", "hereunder", "herein", "hereof" or
words of like import referring to the Loan Agreement shall mean and refer to the
Loan Agreement as amended by this Amendment.
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(b) Upon the effectiveness of this Amendment, each reference in the Loan
Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words
of like import referring to the Loan Agreement shall mean and refer to the Loan
Agreement as amended by this Amendment.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the date first written above.
TRANSAMERICA BUSINESS CREDIT
CORPORATION, a Delaware corporation,
as Agent and a Lender
By:
-------------------------------------
Title:
----------------------------------
XXXXXXX SACHS CREDIT PARTNERS L.P.,
a Bermuda limited partnership
By:
-------------------------------------
Title:
----------------------------------
AUREAL SEMICONDUCTOR INC.
a Delaware corporation
By:
-------------------------------------
Title:
----------------------------------
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SCHEDULE A
SPECIFIED EVENTS OF DEFAULT
(1) Borrower has failed to maintain the minimum Tangible Net Worth
required by Section 7.20(a) of the Loan Agreement for the quarter
ending January 3, 1999.
(2) Borrower has failed to maintain the minimum Profitability required by
Section 7.20(b) of the Loan Agreement for the quarter ending January
3, 1999.
(3) Borrower has failed to maintain the minimum Total Revenues required by
Section 7.20(c) of the Loan Agreement for the quarter ending January
3, 1999.
Each of the items identified in paragraphs (1), (2), and (3) above
constitute an Event of Default under Section 8.2 of the Loan Agreement.
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AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT (this "Amendment")
dated as of March ___, 1999, is entered into among AUREAL SEMICONDUCTOR INC., a
Delaware corporation ("Borrower"), on the one hand, and, on the other hand,
Agent (as hereinafter defined) and the financial institutions (collectively, the
"Lenders" and individually, a "Lender") that are signatories to that certain
Loan and Security Agreement, dated as of June 5, 1998 (as amended, restated,
supplemented, or otherwise modified from time to time, the "Loan Agreement"),
entered into between Borrower, Lenders, and TRANSAMERICA BUSINESS CREDIT
CORPORATION, a Delaware corporation, as agent (herein, in such capacity,
referred to as "Agent") for Lenders thereunder, in light of the following:
W I T N E S S E T H
WHEREAS, the Parties desire to amend the Loan Agreement, in accordance with
the amendment provisions of Section 16.1 thereof, as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend the
Loan Agreement, effective immediately, as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement, as amended
hereby.
2. AMENDMENTS TO LOAN AGREEMENT. Upon the effectiveness of this Amendment, the
parties hereby agree as follows:
(a) Section 2.2(d) of the Loan Agreement hereby is deleted in its entirety
from the Loan Agreement.
(b) Section 2.11(b) of the Loan Agreement hereby is amended and restated
in its entirety to read as follows:
(b) Supplemental Origination Fee. A one-time supplemental
origination fee in the amount of $200,000, such fee to be fully earned
on the Effective Date and due and payable on the first anniversary of
the Effective Date or such earlier date (if any) on which this
Agreement is terminated; provided, however, if all of the Obligations
owing to Xxxxxxx Xxxxx Credit Partners L.P., a Bermuda limited
partnership ("Goldman"), have been paid in full, in cash, on or prior
to May 26, 1999, and all of the Commitments of Goldman are terminated
on or prior to May 26, 1999, then, in connection therewith, Goldman
hereby agrees to waive Xxxxxxx'x Pro-Rata Share of the supplemental
origination fee.
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(c) Section 3.6 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
3.6 Early Termination by Borrower. Borrower has the option, at
any time upon 5 days prior written notice to Agent to terminate this
Agreement by paying to Agent, for the ratable benefit of the Lender
Group, in cash, the Obligations, in full, together with a premium (the
"Early Termination Premium") equal to $250,000; provided, however, if
the Obligations owing to Goldman have been paid in full, in cash, on
or prior to May 26, 1999, and all of the Commitments of Goldman are
terminated on or prior to May 26, 1999, then, in connection therewith,
Goldman hereby agrees to waive Xxxxxxx'x Pro-Rata Share of the Early
Termination Premium and surrender Xxxxxxx'x Warrant to Borrower.
3. CONDITION PRECEDENTS TO AMENDMENT. The satisfaction of each of the
following unless waived or deferred by Agent in its sole discretion, shall
constitute conditions precedent to the effectiveness of this Amendment and each
and every provision hereof:
(a) The representations and warranties in the Loan Agreement as amended by
this Amendment, and the other Loan Documents shall be true and correct in all
respects on and as of the date hereof, as though made on such date (except to
the extent that such representations and warranties relate solely to an earlier
date).
(b) No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
governmental authority against the Agent or Lenders.
(c) Agent shall have received fully executed counterpart signatures to
this Amendment.
(d) Agent shall have received fully executed counterpart signatures to
that certain Amendment Number Three to Put Agreement, dated as of the date
hereof, by and among each of the funds managed by, or other affiliates of,
Oaktree Capital Management LLC identified on Schedule 1A thereto or TCW Special
Credits identified on Schedule 1 thereto and Xxxxxxx Xxxxx Credit Partners,
L.P., a Bermuda limited partnership.
(e) Agent shall have received fully executed counterpart signatures to
that certain Amendment Number Three to Put Agreement, dated as of the date
hereof, by and among each of the funds managed by, or other affiliates of,
Oaktree Capital Management LLC identified on Schedule 1A thereto or TCW Special
Credits identified on Schedule 1 thereto and Transamerica Business Credit
Corporation, a Delaware corporation.
5. CONSTRUCTION. This Amendment shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to its
conflicts-of-laws principles (other than any provisions thereof validating the
choice of the laws of the State of New York as the governing law).
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6. ENTIRE AMENDMENT. This Amendment, and terms and provisions hereof,
constitute the entire agreement among the parties pertaining to the subject
matter hereof and supersedes any and all prior or contemporaneous amendments
relating to the subject matter hereof. Except as expressly amended hereby, the
Loan Agreement and other Loan Documents shall remain unchanged and in full force
and effect. To the extent any terms or provisions of this Amendment conflict
with those of the Loan Agreement or other Loan Document, the terms and
provisions of this Amendment shall control. This Amendment shall be deemed part
of and is hereby incorporated into the Loan Agreement.
7. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Amendment may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Amendment by
signing any such counterpart. Delivery of an executed counterpart of this
Amendment by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Amendment. Any party delivering an
executed counterpart of this Amendment by telefacsimile also shall deliver an
original executed counterpart of this Amendment, but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Amendment.
8. AMENDMENTS. This Amendment cannot be altered, amended, changed or modified
in any respect or particular unless each such alteration, amendment, change or
modification shall have been agreed to by each of the parties and reduced to
writing in its entirety and signed and delivered by each party.
9. MISCELLANEOUS. (a) Upon the effectiveness of this Amendment, each reference
in the Loan Agreement to "this Agreement", "hereunder", "herein", "hereof" or
words of like import referring to the Loan Agreement shall mean and refer to the
Loan Agreement as amended by this Amendment.
(b) Upon the effectiveness of this Amendment, each reference in the Loan
Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words
of like import referring to the Loan Agreement shall mean and refer to the Loan
Agreement as amended by this Amendment.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the date first written above.
TRANSAMERICA BUSINESS CREDIT
CORPORATION, a Delaware corporation,
as Agent and a Lender
By:
-------------------------------------
Title:
----------------------------------
XXXXXXX SACHS CREDIT PARTNERS L.P.,
a Bermuda limited partnership
By:
-------------------------------------
Title:
----------------------------------
AUREAL SEMICONDUCTOR INC.
a Delaware corporation
By:
-------------------------------------
Title:
----------------------------------
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AMENDMENT NUMBER SEVEN
TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER SEVEN (this "Amendment"), to LOAN AND SECURITY
AGREEMENT, dated as of June 5, 1998, among AUREAL INC., a Delaware corporation
formerly known as Aureal Semiconductor Inc. (the "Borrower"), the financial
institutions from time to time parties thereto as lenders (the "Lenders") and
TRANSAMERICA BUSINESS CREDIT CORPORATION, as agent (in such capacity, the
"Agent") for the Lenders, is made as of September 14, 1999 among the Borrower,
the undersigned Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent are parties to the Loan
and Security Agreement, dated as of June 5, 1998 (as heretofore amended, the
"Loan Agreement"; capitalized terms used herein shall have the meanings assigned
to such terms in the Loan Agreement unless otherwise defined herein); and
WHEREAS, the Borrower has requested that the Lenders amend certain
provisions of the Loan Agreement and certain other Loan Documents, and the
Lenders are agreeable to such requests on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto hereby agree as follows:
1. AMENDMENTS TO LOAN AGREEMENT. Effective as of the date hereof, and
subject to the satisfaction of the conditions to effectiveness set forth in
Section 7 hereof, the Loan Agreement is hereby amended as follows:
(a) The definition of "Average Unused Portion of the Maximum Amount"
in Section 1.1 is amended by inserting after the word "month" the following: ",
less (c) the average amount of undrawn Letters of Credit outstanding during the
immediately preceding month."
(b) The definition of "Loan Documents" in Section 1.1 is amended by
inserting after the words "the Warrants," the following: "the Letters of Credit,
the Letter of Credit Agreement, the Guaranty,".
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(c) The definition of "Material Adverse Change" in Section 1.1 is
amended by deleting the word "Borrower" from each place it appears and
substituting therefor the following: "any Loan Party."
(d) The definition of "Maximum Amount" in Section 1.1 is amended and
restated as follows:
"'Maximum Amount' means $12,187,000."
(e) The definition of "Maximum Tranche B Amount" in Section 1.1 is
amended and restated as follows:
"'Maximum Tranche B Amount' means $5,000,000."
(f) The definition of "Obligations" in Section 1.1 is amended by
inserting after the phrase "principal," the following: "reimbursement
obligations,".
(g) The definition of "Pro Rata Share" in Section 1.1 is amended by
inserting after the phrase "to make Tranche A Advances and receive payments of
principal and interest with respect thereto" the following: "and to purchase
participations in Letters of Credit and receive payment with respect thereto."
(h) The definition of "Revolving Facility Usage" in Section 1.1 is
amended by inserting after the phrase "Tranche B Advances outstanding" the
following: ", plus (c) the aggregate undrawn face amount of all Letters of
Credit outstanding."
(i) The definition of "Tranche A Availability" in Section 1.1 is
amended and restated as follows:
"'Tranche A Availability' means the amount that Borrower is entitled
to borrow as Tranche A Advances under Section 2.1 and the undrawn face
amount of Letters of Credit the Borrower is entitled to request under
Section 2.13, such amount being the difference derived when (a) the
aggregate principal amount of Tranche A Advances then outstanding
(including any amounts that the Lender Group may have paid for the
account of Borrower pursuant to any of the Loan Documents and that are
reimbursed by Borrower by being charged to the Loan Account as Tranche
A Advances) plus the aggregate undrawn face amount of Letters of
Credit then outstanding is subtracted from (b) the lesser of (i) the
Maximum Tranche A Amount or (ii) the Borrowing Base."
(j) Section 1.1 is amended by adding the following definitions in
their proper alphabetical order:
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"'Federal Funds Effective Rate' means for any day, the rate equal to
the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as such weighted average is published for such
day (or, if such day is not a Business Day, for the immediately
preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for such Business Day, the average of
the quoted rates for such Business Day on such transactions received
by the Agent from three federal funds brokers of recognized standing
selected by the Agent. Each determination by the Agent of the Federal
Funds Effective Rate shall, in the absence of manifest error, be
conclusive."
"'Guaranty' means the Guaranty, in the form of Exhibit G-1 attached
hereto, made by OCM in favor of the Agent."
"'Issuing Bank' means Bank of America or another bank selected by the
Agent and reasonably acceptable to the Borrower."
"'Letter of Credit Agreement' means the agreement entered into by the
Agent and the Issuing Bank pursuant to which the Agent causes the
Issuing Bank to issue Letters of Credit for the account of the
Borrower in accordance with the terms of this Agreement."
"'Letters of Credit' means the letters of credit issued for the
account of the Borrower under Section 2.13, and all amendments,
renewals, extensions or replacements thereof."
"'Loan Parties' means the Borrower and OCM."
"'OCM' means OCM Opportunities Fund II, L.P., a Delaware limited
partnership."
(k) Section 2.1(a) is amended by deleting the phrase "not to exceed"
and substituting therefor "which, when combined with the aggregate undrawn face
amount of all outstanding Letters of Credit, does not exceed."
(l) Section 2.1(b) is amended and restated as follows:
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"(b) The Lenders shall have no obligation to make further Tranche A
Advances hereunder to the extent they would cause (i) the aggregate
outstanding amount of Tranche A Advances plus the aggregate undrawn
face amount of all outstanding Letters of Credit to exceed the lesser
of the Borrowing Base and the Maximum Tranche A Amount or (ii) the
aggregate outstanding amount of all Advances plus the aggregate
undrawn face amount of all outstanding Letters of Credit to exceed the
Maximum Amount."
(m) Section 2.2(b) is amended by deleting "the outstanding
Obligations" and substituting therefor "the aggregate outstanding amount of all
Advances plus the aggregate undrawn face amount of all outstanding Letters of
Credit."
(n) Section 2.2(d) is amended and restated as follows:
"(d) Anything to the contrary in Sections 2.1 and 2.2 notwithstanding,
the Borrower shall not borrow Tranche B Advances when Tranche A
Availability is greater than zero.
(o) Section 2.2 is amended by adding at the end thereof a new clause
(e) as follows:
"(e) The Lenders shall have no obligation to make Tranche B Advances
unless the OCM Guaranty is in full force and effect."
(p) Section 2.4(b) is amended and restated as follows:
"(b) Apportionment, Application, and Reversal of Payments. All
payments shall be remitted to Agent. Except with respect to defaulting
Lenders, all Collections shall be applied: first, to pay any fees or
expense reimbursements then due to Agent from Borrower; second, to pay
any fees or expense reimbursements then due to the Lenders from
Borrower; third, to pay interest due in respect of all Advances;
fourth, to pay the outstanding principal of Tranche A Advances; fifth,
to pay the outstanding principal of Tranche B Advances; and sixth,
ratably to pay any other Obligations due to Agent or any Lender by
Borrower. For purposes of the foregoing, "payment in full" with
respect to interest shall include interest accrued after the
commencement of any Insolvency Proceeding irrespective of whether a
claim for such interest is allowable in such Insolvency Proceeding."
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(q) Section 2.6(a)(ii) is amended by deleting the phrase "5
percentage points" and substituting therefor "2 percentage points."
(r) Section 2.11(d) is amended and restated as follows:
"(d) Letter of Credit Fees. (i) On the first day of each month
(commencing October 1, 1999) during the term of this Agreement and on
the Maturity Date, a letter of credit fee equal to 3.25% per annum of
the daily average amount of the Letters of Credit outstanding during
the preceding month or during the interim period ending on the
Maturity Date, as the case may be; and
(ii) for the sole account of the Agent, on the first day of each
month (commencing October 1, 1999) during the term of this Agreement
and on the Maturity Date, all customary fees charged to the Agent by
the Issuing Bank which relate directly to the opening, amending or
drawing under Letters of Credit."
(s) Article 2 is amended by adding at the end thereof a new Section
2.13 as follows:
"2.13. Letters of Credit.
(a) The Agent, upon the request of the Borrower, shall use its best
efforts during the term of this Agreement, subject to the terms and
conditions of this Agreement, to cause the Issuing Bank to issue for
the account of the Borrower Letters of Credit of a tenor and
containing terms reasonably acceptable to the Agent and the Issuing
Bank, in a maximum aggregate face amount outstanding at any time not
to exceed One Million Five Hundred Thousand Dollars ($1,500,000),
provided that no Letter of Credit shall have an expiration date after
the Maturity Date. The Agent shall have no obligation to use its best
efforts to cause the Issuing Bank to issue Letters of Credit to the
extent they would cause (i) the aggregate outstanding amount of
Tranche A Advances plus the aggregate undrawn amount of all
outstanding Letters of Credit to exceed the lesser of the Borrowing
Base and the Maximum Tranche A Amount or (ii) the aggregate
outstanding amount of all Advances plus the aggregate undrawn amount
of all Letters of Credit to exceed the Maximum Amount.
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(b) Unless otherwise previously agreed in writing by the Borrower and
the Agent, the initial term of (i) any documentary Letter of Credit
shall not exceed one hundred twenty (120) days from the date of
issuance and (ii) any standby Letter of Credit shall not exceed one
calendar year from the date of issuance, subject to automatic renewal
unless notice to the contrary is given by the Agent or the Issuing
Bank in writing by the applicable date specified in such Letter of
Credit. Each Letter of Credit shall state that, except as otherwise
provided therein, such Letter of Credit is governed by the Uniform
Customs and Practice for Documentary Credits (as most recently
published by the International Chamber of Commerce). Notwithstanding
the purpose of any Letter of Credit or any reference therein or herein
to a Subsidiary or Affiliate of the Borrower, each Letter of Credit
shall be deemed issued for the account of the Borrower and the
obligations arising in connection therewith shall be part of the
Obligations.
(c) Immediately upon issuance or amendment of any Letter of Credit in
accordance with the procedures set forth in this Section 2.13, each
Lender shall be deemed to have irrevocably and unconditionally
purchased and received from the Agent, without recourse or warranty,
an undivided interest and participation, to the extent of such
Lender's Pro Rata Share, of the liability and obligations under and
with respect to such Letter of Credit and the Letter of Credit
Agreement (including, without limitation, all obligations of the
Borrower with respect thereto) and any security therefor or guaranty
pertaining thereto.
(d) Whenever the Borrower desires the issuance of a Letter of Credit,
the Borrower shall deliver to the Agent a written irrevocable request
no later than 10:00 a.m. (California time) at least five (5) Business
Days (or such shorter period as may be agreed to by the Agent) in
advance of the proposed date of issuance. The transmittal by the
Borrower of each such request shall be deemed to be a representation
and warranty by the Borrower that the Letter of Credit may be issued
in accordance with and will not violate any of the requirements of
this Section 2.13. Prior to the date of issuance of each Letter of
Credit, the Borrower shall provide to the Agent a precise
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description of the documents and the text of any certificate to be
presented by the beneficiary of such Letter of Credit which, if
presented by such beneficiary on or prior to the expiration date of
such Letter of Credit, would require the Issuing Bank to make payment
under such Letter of Credit. The Agent, in its reasonable judgment,
may require changes in any such documents and certificates prior to
the date of issuance of any such Letter of Credit. No Letter of Credit
shall require payment against a conforming draft to be made thereunder
prior to the second Business Day after the date on which such draft is
presented.
(e) In the event of any request for drawing under any Letter of
Credit, (i) the Borrower shall be deemed to have timely given a
borrowing request to the Agent to make Tranche A Advances on the date
on which such drawing is honored in an amount equal to the amount of
such drawing and (ii) without regard to satisfaction of the applicable
conditions specified in Article 3 and the other terms and conditions
of borrowings contained herein, the Lenders shall, on the date of such
drawing, make Tranche A Advances in the amount of such drawing, the
proceeds of which shall be applied directly by the Agent to reimburse
the Issuing Bank for the amount of such drawing or payment. If for any
reason, proceeds of Tranche A Advances are not received by the Agent
on such date in an amount equal to the amount of such drawing, the
Borrower shall reimburse the Agent, on the Business Day immediately
following the date of such drawing, in an amount in same day funds
equal to the excess of the amount of such drawing over the amount of
such Advances, if any, which are so received, plus accrued interest on
such amount at the rate applicable to Tranche A Advances.
(f) As among the Borrower, the Agent and each Lender, the Borrower
assumes all risks of the acts and omissions of the Agent and the
Issuing Bank or misuse of the Letters of Credit by the respective
beneficiaries of such Letters of Credit other than the gross
negligence or willful misconduct of the Agent or the Issuing Bank as
determined by a court of competent jurisdiction in a final
nonappealable judgment. In furtherance and not in limitation of the
foregoing, neither the Agent nor any of the Lenders shall be
responsible (i) for the form, validity, sufficiency, accuracy,
genuineness or
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18
legal effects of any document submitted by any party in connection
with the application for and issuance of or any drawing honored under
such Letters of Credit even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged,
(ii) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any such Letter of
Credit, or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any
reason, (iii) for failure of the beneficiary of any such Letter of
Credit to comply fully with conditions required in order to draw upon
such Letter of Credit, (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex, telecopy or otherwise, whether or not they be in
cipher, (v) for errors in interpretation of technical terms, (vi) for
any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit,
or of the proceeds thereof, (vii) for the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any
drawing honored under such Letter of Credit, and (viii) for any
consequences arising from causes beyond the control of the Issuing
Bank, the Agent or the Lenders. None of the above shall affect,
impair, or prevent the vesting of any of the Agent's rights or powers
hereunder. Any action taken or omitted to be taken by the Agent under
or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create
any liability of the Agent to the Borrower or any Lender.
(g) The obligations of the Borrower to reimburse the Agent for
drawings honored under the Letters of Credit and the obligations of
the Lenders under this Section 2.13 shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances including, without limitation,
the following circumstances: (i) any lack of validity or
enforceability of this Agreement, any Letter of Credit, any Letter of
Credit Agreement or any other agreement or instrument relating
thereto; (ii) the existence of any claim, setoff, defense or other
right which the Borrower or any Affiliate of the Borrower may have at
any time
-8-
19
against a beneficiary or any transferee of any Letter of Credit (or
any Persons or entities for whom any such beneficiary or transferee
may be acting), the Agent, any Lender or any other Person, whether in
connection with this Agreement, the other Loan Documents, the
transactions contemplated herein or therein or any unrelated
transaction; (iii) any draft, demand, certificate or other documents
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; (iv) the surrender or impairment
of any security for the performance or observance of any of the terms
of any of the Loan Documents; (v) payment by the Issuing Bank under
any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of
such Letter of Credit; (vi) failure of any drawing under a Letter of
Credit or any non-application or misapplication by the beneficiary of
the proceeds of any drawing; or (vii) the fact that a Potential
Default or Event of Default shall have occurred and be continuing."
(t) The introductory paragraph of Section 3.2 is amended by inserting
after the phrase "all Advances" in each place it appears the following: "and
Letters of Credit."
(u) Section 3.2(d) is amended and restated as follows:
"(d) the amount of the Revolving Facility Usage, after giving effect
to the requested Advance or Letter of Credit, shall not exceed the
lesser of the Availability and the Maximum Amount."
(v) Section 4.1(f) is deleted in its entirety.
(w) The introductory paragraph of Article 5 is amended by (i)
inserting after the phrase "the making of each Advance made thereafter" the
following: "and the issuance of each Letter of Credit issued thereafter" and
(ii) inserting after the phrase "the making of such Advance" the following: "and
the issuance of such Letter of Credit."
(x) The introductory paragraph of Article 6 is amended by inserting
after the phrase "final payment of the Obligations" the following: "and no
Letters of Credit are outstanding."
-9-
20
(y) The introductory paragraph of Article 7 is amended by inserting
after the phrase "final payment of the Obligations" the following: "and no
Letters of Credit are outstanding."
(z) Section 8.2 is amended by (i) deleting the word "or" at the end
of clause (b) thereof and (ii) inserting at the end of such Section the
following: "or (d) If OCM fails or neglects to perform, keep or observe any
term, provision, condition, covenant or agreement contained in any Loan Document
to which OCM is a party and such failure continues for a period of 10 Business
Days;"
(aa) Section 8.4 is amended by deleting "Borrower's" and substituting
therefor "any Loan Party's."
(bb) Section 8.5 is amended by deleting "Borrower" and substituting
therefor "any Loan Party."
(cc) Section 8.6 is amended by deleting "Borrower" from each place it
appears and substituting therefor "any Loan Party."
(dd) Section 8.7 is amended by deleting "Borrower" from the first
place it appears and substituting therefor "any Loan Party."
(ee) Section 8.8 is amended by (i) deleting "Borrower's" from each
place it appears and substituting therefor "a Loan Party's" and (ii) adding
after the phrase "payment date thereof;" the following: "provided, however, that
none of the foregoing liens, levies or assessments on the properties or assets
of OCM shall be an Event of Default unless such liens, levies or assessments
could be reasonably expected to result in a Material Adverse Change;"
(ff) Section 8.9 is amended by (i) deleting "Borrower's" and
substituting therefor "any Loan Party's" and (ii) deleting "Borrower" and
substituting therefor "such Loan Party."
(gg) Section 8.10 is amended by (i) deleting "Borrower" and
substituting therefor "any Loan Party" and (ii) deleting "Borrower's" and
substituting therefor "such Loan Party's."
(hh) Section 8.12 is amended by deleting "Borrower" from each place it
appears and substituting therefor "any Loan Party."
(ii) Section 9.1(b) is amended by inserting immediately after the
phrase "the Lender Group" the following: ", or cease using best efforts to cause
the Issuing Bank to issue
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21
any Letters of Credit or to amend, renew, extend or replace any Letters of
Credit."
(jj) Section 9.1 is amended by (i) deleting the word "and" at the end
of clause (m) thereof, (ii) deleting the period at the end of clause (n) thereof
and substituting therefor "; and" and (ii) inserting at the end of such Section
a new clause (o) as follows:
"(o) With respect to all Letters of Credit outstanding at the
time of the acceleration of the Obligations under Section 9.1(a) or
otherwise at any time after the Maturity Date, require the Borrower to
deposit in a cash collateral account established by or on behalf of
the Agent an amount equal to 105% of the aggregate then undrawn and
unexpired amount of such Letters of Credit (and the Borrower agrees to
forthwith deposit such amounts in such account). Amounts held in such
cash collateral account shall be under the sole dominion and control
of the Agent and applied by the Agent to the payment of drafts drawn
under such Letters of Credit, and the balance, if any, in such cash
collateral account, after all such Letters of Credit shall have
expired or been fully drawn upon shall be applied to repay the other
Obligations. After all such Letters of Credit shall have expired or
been fully drawn upon and all Obligations shall have been paid in
full, the balance, if any, in such cash collateral account shall be
returned to the Borrower or to such other Person as may be lawfully
entitled thereto."
(kk) Section 16.1(b) is amended by (i) inserting after "principal,"
the following: "reimbursement obligation," and (ii) inserting after the phrase
"or other amounts due to" the following: "the Agent or."
(ll) Schedule C-1 to the Loan Agreement is amended and restated in the
form of Schedule C-1 attached hereto.
(mm) The Loan Agreement is amended by adding thereto a new Exhibit G-1
in the form of Exhibit G-1 attached hereto.
2. AMENDMENT TO COPYRIGHT SECURITY AGREEMENT. Effective as of the date
hereof, and subject to the satisfaction of the conditions to effectiveness set
forth in Section 7 hereof, Section 2(g) of the Copyright Security Agreement is
deleted in its entirety.
-11-
22
3. AMENDMENT TO PATENT SECURITY AGREEMENT. Effective as of the date
hereof, and subject to the satisfaction of the conditions to effectiveness set
forth in Section 7 hereof, Section 2(g) of the Patent Security Agreement is
deleted in its entirety.
4. AMENDMENT TO TRADEMARK SECURITY AGREEMENT. Effective as of the date
hereof, and subject to the satisfaction of the conditions to effectiveness set
forth in Section 7 hereof, Section 2(g) of the Trademark Security Agreement is
deleted in its entirety.
5. AMENDMENT TO STOCK PLEDGE AGREEMENT. Effective as of the date hereof,
and subject to the satisfaction of the conditions to effectiveness set forth in
Section 7 hereof, Section 3 of the Stock Pledge Agreement is amended and
restated as follows: "3. [Intentionally Deleted]."
6. AMENDMENT TO DEPOSIT ACCOUNT SECURITY AGREEMENT. Effective as of the
date hereof, and subject to the satisfaction of the conditions to effectiveness
set forth in Section 7 hereof, Section 5 of the Deposit Account Security
Agreement is amended and restated as follows: "5. [Intentionally Deleted]."
7. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective
upon the Agent's receipt of an amendment fee of $50,000 for the ratable benefit
of the Lenders and the following documents, in each case in form and substance
satisfactory to the Agent:
(a) This Amendment, duly executed by the Borrower and the Required
Lenders.
(b) The guaranty, substantially in the form of Exhibit G-1 (the
"Guaranty"), duly executed by OCM Opportunities Fund II, L.P. ("OCM").
(c) Certified copies of (A) the resolutions of the Board of Directors
of OCM (together with the Borrower, the "Loan Parties") approving the Guaranty
and the transactions contemplated thereby, (B) the partnership agreement of OCM
as amended through the date hereof and (C) all documents evidencing other
necessary actions and government approvals, if any, with respect to the
Guaranty, this Amendment, the Loan Agreement as amended hereby and the documents
contemplated hereby or delivered in connection herewith (the "Amendment
Documents").
(d) A certificate of the Secretary or an Assistant Secretary of OCM
certifying the name and true signature of an authorized officer of OCM who is
authorized to sign the Guaranty.
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23
(e) A certificate signed by an authorized officer of the Borrower
certifying that (i) the representations and warranties contained in Section 8
hereof are true and correct in all material respects on and as of the date of
such certificate as though made on and as of such date (except to the extent
such representations and warranties expressly relate to an earlier date, in
which case such representations and warranties were true and correct on and as
of such earlier date), (ii) the representations and warranties contained in the
Loan Agreement are true and correct in all material respects on and as of the
date of such certificate as though made on and as of such date (except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties were true and correct on and
as of such earlier date), (iii) no Potential Default or Event of Default has
occurred and is continuing and (iv) there has occurred no Material Adverse
Change since July 4, 1999.
(f) Any agreements and other instruments required pursuant to the
Loan Agreement, this Amendment or the Letter of Credit Agreement to cause to be
issued any Letters of Credit.
(g) A legal opinion of counsel to OCM covering such matters relating
to the transactions contemplated by the Guaranty as the Agent shall reasonably
request
(h) A certificate of an authorized officer of OCM to the effect that
OCM is Solvent and will be Solvent after giving effect to the consummation of
the transactions contemplated by this Amendment.
(i) Such other documents, instruments, opinions, evidence, materials
and information as the Agent may reasonably request.
8. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows:
(a) Since July 4, 1999, there has occurred no Material Adverse
Change.
(b) No Potential Default or Event of Default has occurred and is
continuing.
(c) The representations and warranties contained in the Loan
Agreement are true and correct in all material respects on the date hereof as
though made on and as of the date hereof, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties were true and correct on and as
of such earlier date).
-13-
24
(d) Each Amendment Document to which any Loan Party is a party
constitutes the legal, valid and binding obligations of the such Loan Party,
enforceable against such Loan Party in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency and other laws affecting
creditors' rights generally and by general principles of equity.
(e) The execution, delivery and performance by each Loan Party of the
Amendment Documents to which it is a party, and the consummation of the
transactions contemplated thereby, are within such Loan Party's powers, have
been duly authorized by all necessary action on the part of such Loan Party and
do not (i) contravene such Loan Party's Governing Documents, (ii) violate any
law or regulation, (iii) conflict with or result in the breach of, or constitute
a default under, any contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting such Loan Party or any
of its properties or (iv) except for the Liens created under the Loan Documents,
result in or require the creation or imposition of any Lien upon or with respect
to any of the properties of such Loan Party.
(f) No consent of any Person, and no permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any Amendment
Document and the transactions contemplated thereby.
9. EXPENSES. The Borrower shall pay for all of the reasonable costs and
expenses incurred by the Agent in connection with the transactions contemplated
by the Amendment Documents, including, without limitation, the reasonable fees
and expenses of counsel to the Agent.
10. MISCELLANEOUS.
(a) Except as expressly amended herein, all of the terms and
provisions of the Loan Agreement and the other Loan Documents are ratified and
confirmed in all respects and shall remain in full force and effect.
(b) Upon the effectiveness of this Amendment, all references in the
Loan Documents to the Loan Agreement shall mean the Loan Agreement as amended by
this Amendment and all references in the Loan Agreement to "this Agreement,"
"hereof," "herein," or similar terms, shall mean and refer to the Loan Agreement
as amended by this Amendment.
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25
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as an amendment to or waiver
of any right, power or remedy of the Agent or the Lenders under any of the Loan
Documents, or constitute an amendment or waiver of any provision of any of the
Loan Documents.
(d) This Amendment may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be an
original and all of which shall constitute one and the same agreement. This
Amendment may be executed and delivered by telecopier with the same force and
effect as if the same were a fully executed and delivered original manual
counterpart.
(e) This Amendment shall constitute a Loan Document.
11. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW).
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26
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers.
AUREAL INC., formerly known as
Aureal Semiconductor Inc.
By:
-------------------------------------
Name:
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as Agent and as Lender
By:
-------------------------------------
Name:
Title:
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27
Schedule C-1
Commitments
Commitment to Make Commitment to Make Total Commitments Pro Rata
Lender Tranche A Advances Tranche B Advances* of Lenders Share
-----------------------------------------------------------------------------------------------------
Transamerica Business $12,187,000 $5,000,000 $12,187,500 100%
Credit Corporation
Total of All Lenders $12,187,000 $5,000,000 $12,187,000 100%
-----------------------------------------------------------------------------------------------------
* Tranche B is a Sublimit of Tranche A
28
AMENDMENT NUMBER EIGHT
TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER EIGHT (this "Amendment"), to LOAN AND SECURITY
AGREEMENT, dated as of June 5, 1998, among AUREAL INC., a Delaware corporation
formerly known as Aureal Semiconductor Inc. (the "Borrower"), TRANSAMERICA
BUSINESS CREDIT CORPORATION ("TBCC"), PNC BANK, NATIONAL ASSOCIATION ("PNC" and,
together with TBCC, the "Lenders") and TBCC, as agent (in such capacity, the
"Agent") for the Lenders, is made as of September 30, 1999 among the Borrower,
the Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, the Borrower, TBCC and the Agent are parties to the Loan and
Security Agreement, dated as of June 5, 1998 (as heretofore amended, the "Loan
Agreement"; capitalized terms used herein shall have the meanings assigned to
such terms in the Loan Agreement unless otherwise defined herein); and
WHEREAS, the parties hereto wish to amend the Loan Agreement to, among
other things, increase the maximum amount of the credit facility and include PNC
as a Lender under the Loan Agreement and the other Loan Documents.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto hereby agree as follows:
1. AMENDMENTS TO LOAN AGREEMENT. Effective as of the date hereof, and
subject to the satisfaction of the conditions to effectiveness set forth in
Section 3 hereof, the Loan Agreement is hereby amended as follows:
(a) The definition of "Maximum Amount" in Section 1.1 is amended and
restated as follows:
"'Maximum Amount' means $25,000,000."
(b) The definition of "Maximum Tranche A Amount" in Section 1.1 is
amended and restated as follows:
"'Maximum Tranche A Amount' means $25,000,000."
(c) The definition of "Maximum Tranche B Amount" in Section 1.1 is
amended and restated as follows:
"'Maximum Tranche B Amount' means $5,000,000."
29
(d) Section 1.1 is amended by adding the following definitions in
their proper alphabetical order:
"'Eligible Equipment' means the Equipment of the Borrower located in
the United States, which is free from any claim of title or Lien in
favor of any Person (other than Liens in favor of the Agent) and with
respect to which no event has occurred and no condition exists which
could be reasonably expected to impair substantially the Borrower's
ability to use such Equipment in the ordinary course of its business
and which the Agent, in good faith, shall deem eligible to serve as
collateral for Advances. No Equipment of the Borrower shall be
Eligible Equipment unless the Agent has a perfected first priority
Lien thereon. No Equipment of the Borrower shall be Eligible Equipment
unless (i) it is located on property owned by the Borrower or (ii) it
is located on property leased by the Borrower or in a contract
warehouse which is subject to a Collateral Access Agreement executed
by the mortgagee, lessor or contract warehouseman, as the case may be,
and segregated or otherwise separately identifiable from goods of
others, if any, stored on the premises."
"'Orderly Liquidation Value of Equipment' means the orderly
liquidation value of Eligible Equipment as determined from time to
time by an appraiser selected by the Agent. The Orderly Liquidation
Value of Equipment is equal to $624,120 on September 30, 1999, as such
amount may be adjusted from time to time pursuant to Section 4.6."
(e) Section 2.1(a) is amended by deleting the phrase "80% of Eligible
Accounts (net of the Foreign Accounts Reserve), less the amount, if any, of the
Dilution Reserve" and substituting therefor "an amount equal to the sum of (i)
85% of Eligible Accounts (net of the Foreign Accounts Reserve), less the amount,
if any, of the Dilution Reserve plus (ii) 75% of the Orderly Liquidation Value
of Eligible Equipment."
(f) Section 2.6(a) is amended and restated as follows:
"(a) Interest Rate. Except as provided in clause (c) below, all
Obligations shall bear interest at a per annum rate of 2 percentage
points above the Reference Rate."
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30
(g) Section 2.6(d) is amended as follows:
(i) by deleting "$500,000" from each place it appears and
substituting therefor "200,000";
(ii) by deleting "(y) during the period commencing on the
Effective Date and ending on the earlier to occur of the first
anniversary of the Effective Date" and substituting therefor "(y)
during the period commencing on July 1, 1999 and ending on the earlier
to occur of June 30, 2000"; and
(iii) by deleting "(z) during the period commencing on the first
anniversary of the Effective Date and ending on the earlier to occur
of the second anniversary of the Effective Date" and substituting
therefor "(z) during the period commencing on July 1, 2000 and ending
on the earlier to occur of June 30, 2001."
(h) Section 3.4 of the Loan Agreement is hereby amended by deleting
"June 5, 2000" and substituting therefor "July 2, 2001."
(i) Section 3.6 is amended by deleting "$250,000" and substituting
therefor "the product of (a) $20,000 and (b) the number of months (rounded
upwards to the nearest whole number) from the date this Agreement is terminated
to the Maturity Date."
(j) Section 4.6 is amended by inserting at the end thereof the
following: "Without limiting the generality of the foregoing, the Borrower
agrees that the Agent may from time to time hire appraisers to redetermine the
Orderly Liquidation Value of the Equipment and the Borrower shall reimburse the
Agent for the fees, costs and expenses associated with such appraisal."
(k) Section 7.20(a) is amended and restated as follows:
"(a) [Intentionally omitted]."
(l) Section 7.20(b) is amended and restated as follows:
"(b) Profitability. Achieve EBITDA of not less than the amount shown
below for the period corresponding thereto (amounts in brackets ($)
are negative):
-3-
31
Period Minimum EBITDA
--------------------------------------------------------------------------------
the fiscal quarter ending on or about September 30, 1999 ($7,600,000)
the fiscal quarter ending on or about December 31, 1999 ($4,500,000)
the fiscal quarter ending on or about March 31, 2000 ($300,000)
the fiscal quarter ending on or about June 30, 2000 ($1,100,000)
the fiscal quarter ending on or about September 30, 2000 $500,000
each fiscal quarter ending thereafter $1,500,000"
(m) Section 7.20(c) is amended and restated as follows:
"(c) Total Revenues. Achieve total revenues, determined in accordance
with GAAP on a basis consistent with past practice, of not less than
the amount shown below for the period corresponding thereto:
32
Period Minimum Total Revenue
------------------------------------------------------------------------------------
the fiscal quarter ending on or about September 30, 1999 $7,900,000
the fiscal quarter ending on or about December 31, 1999 $12,900,000
the fiscal quarter ending on or about March 31, 2000 $16,100,000
the fiscal quarter ending on or about June 30, 2000 $12,900,000
the fiscal quarter ending on or about September 30, 2000 $16,200,000
each fiscal quarter ending thereafter $20,200,000"
(n) Section 7.21 is amended and restated as follows:
"7.21 Capital Expenditures. Make capital expenditures in excess of:
(a) $2,250,000 during the fiscal year ending on or about December 31,
1999; or (b) $1,500,000 during the fiscal year ending on or about
December 31, 2000; or (c) $2,250,000 during the period commencing on
the first day immediately following the end of the fiscal year ending
on or about December 31, 2000 and ending on the Maturity Date."
(o) Section 17.9 is amended by adding the following at the beginning
of such Section:
"If (a) either (i) TBCC is liquidated, dissolved, merged or
consolidated with any Person in a transaction in which TBCC is not the
surviving entity or (ii) Aegon Corporation or one of its Affiliates
ceases to own, directly or indirectly, a majority of the capital stock
of TBCC, (b) TBCC (or its successor) ceases to conduct business as an
asset based lender and (c) the Pro Rata Share of the Commitments of
PNC Bank, National Association ("PNC") is equal to or greater than
50%, then PNC shall have the option to succeed TBCC as Agent or
appoint a successor Agent to succeed TBCC as Agent, in each case
subject to the terms set forth below."
(p) Schedule C-1 to the Loan Agreement is amended and restated in the
form of Schedule C-1 attached hereto.
-5-
33
2. ASSIGNMENT.
(a) Immediately after giving effect to the amendments set forth in
Section 1 hereof, TBCC hereby sells and assigns to PNC, and PNC hereby purchases
and assumes from TBCC, that interest in and to TBCC's rights and obligations
under the Loan Documents as of the date hereof with respect to the Obligations
owing to TBCC, and the Commitments to make Advances and participate in Letters
of Credit, as is set forth on Annex A hereto.
(b) TBCC (i) represents and warrants to PNC that TBCC is the legal
and beneficial owner of the interest being assigned by TBCC hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Borrower or
any of its Subsidiaries or the performance or observance by Borrower or any of
its Subsidiaries of any of its obligations under the Loan Documents or any other
instrument or document furnished pursuant thereto.
(c) PNC (i) confirms that it has received copies of the Loan
Agreement and the other Loan Documents, together with copies of the financial
statements referred to therein and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement; (ii) agrees that it will, independently and
without reliance, as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Documents;
(iii) confirms that it is eligible as an assignee under the terms of the Loan
Agreement; (iv) appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under the Loan Documents as are
delegated to Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender.
(d) TBCC and PNC agree that (i) all amounts accrued with respect to
the Commitments, the Advances and the Letters of Credit prior to PNC's payment
of the amount (the "Specified Amount") referred to in Section 3(f) of this
Amendment to TBCC shall be for the account of TBCC and (ii) all such amounts
accrued after PNC's payment of the Specified Amount to
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34
TBCC shall be for the account of the Lenders based upon their respective shares
of the Commitments and the Advances.
(e) Upon PNC's payment of the Specified Amount to TBCC, (i) PNC shall
be a party to the Loan Agreement and, to the extent provided herein, have the
rights and obligations of a Lender thereunder and under the other Loan Documents
and (ii) TBCC shall, to the extent provided herein, relinquish its rights and be
released from its obligations under the Loan Agreement and the other Loan
Documents.
3. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective
upon the Agent's receipt of the following, each of which shall be in form and
substance satisfactory to the Agent:
(a) This Amendment, duly executed by the Borrower and the Lenders and
duly consented to by OCM.
(b) An amendment fee, for the ratable benefit of the Lenders, in an
amount equal to $200,000 in immediately available funds, which shall be fully
earned and non-refundable upon the effectiveness of this Amendment.
(c) Certified copies of the resolutions of the Board of Directors of
the Borrower approving this Amendment, the Loan Agreement as amended hereby and
the other documents contemplated hereby or delivered in connection herewith
(collectively, the "Amendment Documents").
(d) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the name and true signature of an authorized officer of the
Borrower who is authorized to sign the Amendment Documents.
(e) A certificate signed by an authorized officer of the Borrower
certifying that (i) the representations and warranties contained in Section 4
hereof are true and correct in all material respects on and as of the date of
such certificate as though made on and as of such date (except to the extent
such representations and warranties expressly relate to an earlier date, in
which case such representations and warranties were true and correct on and as
of such earlier date), (ii) the representations and warranties contained in the
Loan Agreement are true and correct in all material respects on and as of the
date of such certificate as though made on and as of such date (except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties were true and correct on and
as of such earlier date), (iii) no Potential Default or Event of Default has
occurred and is continuing and (iv) there has occurred no Material Adverse
Change since July 4, 1999.
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(f) An amount from PNC, for the benefit of TBCC, equal to PNC's
outstanding Advances (immediately after giving effect to this Amendment).
(g) A legal opinion of counsel to the Borrower covering such matters
relating to the transactions contemplated by this Amendment as the Agent shall
reasonably request.
(h) Information with respect to the status of the Creative
Technology, Ltd. litigation filed in the United States District Court for the
Northern District of California (Case No. 98-0770 WHO), which shall be
satisfactory to the Lenders.
(i) Such other documents, instruments, opinions, evidence, materials
and information as the Agent may reasonably request.
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows:
(a) Since July 4, 1999 there has occurred no Material Adverse Change.
(b) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
(c) The representations and warranties contained in Section 5 of the
Loan Agreement are true and correct in all material respects on the date hereof
as though made on and as of the date hereof, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties were true and correct on and as
of such earlier date).
(d) The Amendment Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency and other laws affecting creditors' rights generally and by general
principles of equity.
(e) The execution, delivery and performance by the Borrower of the
Amendment Documents, and the consummation of the transactions contemplated
thereby, are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action on the part of the Borrower, and do not (i)
contravene the Borrower's Governing Documents, (ii) violate any law or
regulation, (iii) conflict with or result in the breach of, or constitute a
default under, any contract, loan agreement, indenture, mortgage, deed of trust,
lease or other instrument binding on or affecting the Borrower or any of its
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properties or (iv) except for the Liens created under the Loan Documents, result
in or require the creation or imposition of any Lien upon or with respect to any
of the properties of the Borrower.
(f) No consent of any Person, and no permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any Governmental Authority or other Person is required in
connection with the execution, delivery, performance, validity or enforceability
of the Amendment Documents and the transactions contemplated thereby.
5. EXPENSES. The Borrower shall pay for all of the reasonable costs and
expenses incurred by the Agent in connection with the transactions contemplated
by this Amendment, including, without limitation, the reasonable fees and
expenses of counsel to the Agent.
6. MISCELLANEOUS.
(a) Except as expressly amended herein, all of the terms and
provisions of the Loan Agreement and the other Loan Documents are ratified and
confirmed in all respects and shall remain in full force and effect.
(b) Upon the effectiveness of this Amendment, all references in the
Loan Documents to the Loan Agreement shall mean the Loan Agreement as amended by
this Amendment and all references in the Loan Agreement to "this Agreement,"
"hereof," "herein," or similar terms, shall mean and refer to the Loan Agreement
as amended by this Amendment.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as an amendment to or waiver
of any right, power or remedy of the Agent or the Lenders under any of the Loan
Documents, or constitute an amendment or waiver of any provision of any of the
Loan Documents.
(d) This Amendment may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be an
original and all of which shall constitute one and the same agreement. This
Amendment may be executed and delivered by telecopier with the same force and
effect as if the same were a fully executed and delivered original manual
counterpart.
(e) This Amendment shall constitute a Loan Document.
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37
7. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW).
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38
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers.
AUREAL INC., formerly known
as Aureal Semiconductor Inc.
By:
-------------------------------------
Name:
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as Agent and a Lender
By:
-------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------------
Name:
Title:
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39
The undersigned Loan Party hereby consents to this Amendment and
acknowledges that the execution, delivery and performance of this Amendment does
not in any way affect its obligations under the Guaranty, all of which
obligations are ratified and confirmed, remain absolute and unconditional and
are not subject to any defense, setoff or counterclaim.
OCM OPPORTUNITIES FUND II, L.P.
By: Oaktree Capital Management,
LLC, its General Partner
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
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40
Commitments
Commitment to Make Commitment to Make Total Commitments Pro Rata
Lender Tranche A Advances Tranche B Advances* of Lenders Share
-----------------------------------------------------------------------------------------------------
Transamerica Business Credit $12,500,000 $2,500,000 $12,500,000 50%
Corporation
PNC Bank, National Association $12,500,000 $2,500,000 $12,500,000 50%
Total of All Lenders $25,000,000 $5,000,000 $25,000,000 100%
* Tranche B is a Sublimit of Tranche A
41
Annex A
Assignment from Transamerica Business Credit Corporation
("TBCC") to PNC Bank, National Association ("PNC")
A. Total Commitment of TBCC Immediately Prior to Assignment $25,000,000
1. Commitment to Make Tranche A Advances $25,000,000
2. Commitment to Make Tranche B Advances* $5,000,000
B. Assigned Share of Commitment to Make Tranche A Advances 50%
C. Assigned Share of Commitment to Make Tranche B Advances 50%
D. Total Commitment of TBCC Immediately After Assignment $12,500,000
1. Commitment to Make Tranche A Advances $12,500,000
2. Commitment to Make Tranche B Advances* $2,500,000
E. Total Commitment of PNC Immediately After Assignment $12,500,000
1. Commitment to Make Tranche A Advances $12,500,000
2. Commitment to Make Tranche B Advances* $2,500,000
====================================================================================
* Tranche B is a Sublimit of Tranche A
